Can a firm pay a former partner who became a prosecutor a share of a contingent fee earned after he left the firm?

Plain-English summary

A partner brought two personal injury cases into a firm, then left to become an Assistant State's Attorney, a job that disqualified him from private practice. He demanded a third of any contingent fee on those cases, but no agreement was reached. A year after he left, the firm settled the first case; the second remained pending. The firm asked whether it could pay him a share of the fee earned after he became a prosecutor.

The Committee concludes the firm may pay the former partner a share of a fee earned on the case after he withdrew, where the payment is part of a separation agreement under Rule 1.5(j) and does not violate public policy by leaving the firm without incentive to handle the client's case carefully. It relies on Romanek v. Connelly, which held that an agreement to share a contingent fee with a lawyer formerly in the firm falls under Rule 1.5(j) ("payment to a lawyer formerly in the firm, pursuant to a retirement or separation agreement") rather than the stricter referral provisions of Rule 1.5(f), and on Corti v. Fleisher, which makes such case-linked payments improper only where they offend public policy.

The Committee then addresses the prosecutor's disqualification. A Rule 1.5(j) separation payment does not require the disclosure and client consent of Rule 1.5(f) or the proportional-service and shared-responsibility conditions of Rule 1.5(g), so the disqualification does not defeat it. Even if the parties did not reach a 1.5(j) separation agreement, the Committee notes that under In re Storment and Elane v. St. Bernard Hospital a lawyer who later becomes ineligible to practice (a disbarred lawyer, a judge) can still retain enough financial responsibility to share a referral fee under Rule 1.5(g), though those cases also show the client-consent requirements of Rule 1.5(f) must be met. Finally, the Committee concludes the former partner could, as part of a 1.5(j) agreement, contribute money toward preparing the second case for trial.

Currency note

This opinion was issued in 2004, before Illinois adopted its current Rules of Professional Conduct effective January 1, 2010. The Illinois Rules cited here use the pre-2010 numbering; the Board of Governors affirmed the opinion against 2010 Rule 1.5(e). Subsequent rule amendments or later opinions may have changed the analysis. Verify against current rules before relying on any specific rule cited here.

In practice

Under the Illinois rules as they stood at the time, the opinion holds that a separation-agreement payment to a lawyer formerly in the firm is governed by Rule 1.5(j), not the stricter fee-division rules, so it does not require client consent or proportional service, and a former partner's later disqualification from practice does not bar it as long as the agreement does not offend public policy. The Committee identifies whether the firm retains incentive to handle the client's case competently as the controlling public-policy factor.

Common questions

Q: Can a firm pay a departed partner a share of a fee earned after he left?

A: Yes. The opinion concludes that, under Rule 1.5(j), a firm may pay a lawyer formerly in the firm a share of a later-earned contingent fee as part of a separation agreement, provided the arrangement does not violate public policy.

Q: Does becoming a prosecutor, and being barred from private practice, prevent the payment?

A: No. The opinion concludes the disqualification does not bar a Rule 1.5(j) separation payment, which does not require the client consent or proportional responsibility that Rules 1.5(f) and (g) demand.

Q: How is a Rule 1.5(j) separation payment different from a referral fee under Rule 1.5(f) or (g)?

A: The opinion explains that Rule 1.5(j) does not require client consent and disclosure (Rule 1.5(f)) or division in proportion to services and shared responsibility (Rule 1.5(g)); it asks only that the separation agreement not violate public policy.

Q: Could the former partner contribute to the costs of preparing the second case?

A: Yes. The opinion concludes that, as part of a Rule 1.5(j) separation agreement, the former partner could properly contribute money toward the cost of preparing the second case for trial.

Background and rules framework

The opinion interprets Illinois Rule 1.5 (fees, corresponding to Model Rule 1.5), distinguishing the separation-agreement provision in Rule 1.5(j) from the fee-division and referral provisions in Rules 1.5(f) and (g). The analysis turns on which provision governs payments to a lawyer who has left the firm, and on whether the arrangement offends public policy.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.5 / Illinois Rule 1.5(f), 1.5(g), 1.5(j) (fee division; referral fees; separation-agreement payments)

Cases:

• Romanek v. Connelly, 234 Ill. App. 3d 393, 753 N.E.2d 1062 (1st Dist. 2001), separation-agreement fee sharing under Rule 1.5(j)
• In re Storment, 203 Ill. 2d 378, 786 N.E.2d 963 (2002), referral fee to a lawyer ineligible to practice
• Elane v. St. Bernard Hospital, 284 Ill. App. 3d 865, 672 N.E.2d 820 (1st Dist. 1996), fee sharing with a lawyer who became a judge
• Corti v. Fleisher, 93 Ill. App. 3d 517, 417 N.E.2d 764 (1st Dist. 1981), public-policy limits on case-linked fee payments

See also

• ABA Formal Op. 487: Fee Division With a Client's Prior Counsel
• ABA Formal Op. 475: Safeguarding Fees Subject to Division

Source

• Landing page: https://www.isba.org/ethics/opinions/0306